Gov. Ducey fails to lead on renewal of Prop. 301 education sales tax

Democratic lawmakers last year introduced legislation to extend and expand Prop. 301, the education sales tax set to expire in 2021 unless renewed, but Republican leadership never granted it a public hearing or vote. I posted about Prop. 301 earlier this year. Pass HB 2158 to permanently extend Prop. 301 education funding (excerpts):

The education sales tax, which voters passed in 2000 as Proposition 301, is set to expire in mid-2021.

State Rep. Doug Coleman told The Arizona Republic that House Bill 2158 would essentially “get rid of the cliff” surrounding Prop. 301.

Prop. 301 is a 0.6 cent per dollar education-funding sales tax. Its future has been a point of contention and concern among education and business advocates and state leaders. The money funds things such as teacher salaries and classroom expenses.

The sales tax — and the hundreds of millions of school-funding dollars that come with it — will be gone unless voters approve an extension of the tax in the 2018 or 2020 election or two-thirds of the state’s 90-member Legislature pass legislation to maintain the funding.

Coleman said his House Bill 2158 would not have additional funding beyond what schools already receive and would not change how the money from the sales is doled out to schools.

“This bill is just keeping what is there, there,” Coleman said. “I just want to make sure that everyone is left whole, and we can do that with this bill.”

“… I just don’t think it’s good policy to be facing what could be a catastrophic cliff for everybody.”

There has been wide support among education and business advocates for extending and increasing the sales tax under Prop. 301 — viewed by many as a crucial step toward restoring hundreds of millions of dollars of education-funding cuts following the recession.

Gov. Ducey last year toldThe Republic he was open to extending the current sales tax. He has said several times that he would like to see a broad coalition examine the issue, and possibly modernize Prop. 301. He hasn’t publicly said how he’d like to see Prop. 301 changed.

He said as recently as Wednesday that there was still “plenty of time” to tackle Prop. 301 before it expires.

The governor won office in 2014 on a pledge not to increase taxes and had said his position on Prop. 301 didn’t change that.

Gov. Ducey did not broach the issue of Prop. 301 in his State of the State address.

Two points: Gov. Ducey does not want the Prop. 301 extension on the ballot in 2018 while he is running for reelection. This is why the “broad coalition” of business and education leaders proposing an extension and increase in the education sales tax have proposed a ballot measure for 2020.

And our anti-tax Koch-bot governor will never support any increase in taxes while he is governor. House Bill 2158 only proposes a continuation of the current status of Prop. 301, not an increase.

There is no good reason for the governor to oppose this bill. It is an opportunity to be fiscally responsible, for a change, and to forestall a fiscal cliff for school funding in 2021. But he has failed to lead on this issue.

The Arizona House Education Committee voted Monday to approve legislation that would continue for another eight years the education sales tax that brings in about $643 million a year to Arizona schools.

The tax, which voters passed in 2000 as Proposition 301, is set to expire in mid-2021.

During Monday’s hearing, Rep. Rusty Bowers, R-Mesa, supported the bill, but said he would like to see the money directed more toward teacher pay.

“I am hopeful that there will be continued conversations,” he said.

Chuck Essigs, lobbyist for the Arizona Association of School Business Officials, said with the sales tax, teachers currently see a benefit of about $5,300 each a year. Without the tax, he said, their salaries would fall 11.5 percent.

Rep. Reginald Bolding, D-Phoenix, said he also looks forward to having a conversation about making sure teachers are adequately funded. He said he would also like to look at reallocation of the formula.

“I wasn’t part of that original conversation. I was 10 years old,” he said. “But I”m here now and I want to be part of that conversation.”

The bill passed the committee. It still needs a vote of the full House before moving to the Senate for consideration.

Brophy McGee: The bill is a start

There has been wide support among education and business advocates for extending and even increasing the sales tax under Prop. 301 [in 2020] — viewed by many as a crucial step toward restoring hundreds of millions of dollars of education-funding cuts following the recession.

During Monday’s hearing, Sen. Kate Brophy McGee, R-Phoenix, called the bill the start of a bipartisan conversation.

“I’m advocating for ending the cliff and giving districts some stability,” she said. “We also need to educate the public about this program, what it did and what it is we want it to do.”

She introduced an identical bill extending the education sales tax in the Senate.

Senate Bill 1390 has 56 other lawmakers — both Democrats and Republicans — signed on in support.

Senate Republican leadership has not granted that bill a public hearing.

Arizona Gov. Doug Ducey has repeatedly presented his most recent budget proposal as restoring recession-era cuts to K-12 education, when in reality, it doesn’t even restore the Ducey-era cuts.

The governor’s $10.1 billion budget proposal for fiscal year 2019, which begins in July, represents a spending increase of $315 million from the current budget, including $190 million in discretionary K-12 spending increases.

In his state of the state address, Ducey declared the budget would “restore longstanding cuts from the recession made before many of us were here.”

His marquee policy item, and single largest discretional increase in education spending, is an additional $100 million in capital funding known as District and Charter Additional Assistance, which district and charter schools can use to cover everything from textbooks to school buses.

In 2015, his first year in office, Ducey cut District and Charter Additional Assistance to the tune of $116 million — a cut he has never restored.

District and Charter Additional Assistance was once one of the main funding sources school districts and charters tapped to pay for ongoing maintenance needs — fixing air conditioning units, repaving parking lots, repairing busted pipes and buying classroom supplies like textbooks, computers and desks.

But when the recession gripped Arizona, lawmakers slashed that funding in 2009, and continued to cut it through the administration of former Gov. Jan Brewer.

By law, school districts and charters are supposed to receive a certain amount of District and Charter Additional Assistance from the state based on student enrollment. In three years of Ducey’s governorship, schools have missed out on more than $1 billion that they were entitled to under that funding formula.

Ducey authorized $348 million worth of that $1 billion cut. The other reductions were made before he took office, but continued under his administration.

Ducey’s 2019 budget proposal came with a promise to, within the next five years, restore District and Charter Additional Assistance to roughly the same level it was a decade ago. But it will never come close to restoring the more than $2 billion of District and Charter Additional Assistance funding that schools lost since 2009.

MAKING DO

Ducey spokesman Daniel Scarpinato acknowledged that neither the budget proposal, nor the five-year plan, would return all the money schools have missed out on over the last decade.

“We can’t go back. All we can do is deal with what lies ahead. So what we want to do is get that number back to what it would be had those reductions not been made. This plan does that,” he said.

He noted that school groups are suing the state for back payments on capital funding that they missed during the recession. And while the administration has called on those groups to end the lawsuit in light of the governor’s proposed increase to capital funding, the legal battle continues.

Critics say Ducey’s budget and the talking points surrounding it conform with the pattern he has created since becoming governor.

The governor has repeatedly cut funding, then taken credit for partially restoring it — as he did when he slashed JTED funding by $30 million in 2015 and proposed restoring $10 million over three years starting in 2016 (lawmakers went higher and restored $28 million in 2016).

And Arizona school finance gurus say while the budget is an undeniable increase in K-12 education, it’s far too little to solve schools’ capital funding problems.

Scarpinato said the governor is doing what he can with available dollars, and noted that the vast majority of the new spending in the governor’s budget is targeted to K-12.

He said if revenues increase in the future, the governor will invest those funds into education as well.

He said that critics who argue that the governor is taking credit for restoring cuts he made seem to be forgetting the financial mess Ducey inherited, when the state was facing a projected shortfall of $1 billion. [Due to corporate welfare tax cuts approved by Governor Jan Brewer which were phased in over a four year period, creating a revenue drain.]

“Look, we came in with a billion dollar budget shortfall. The budget is now responsibly and structurally balanced [not true], which allows us to make investments. And this is where we’re going to make the investment going forward, because it’s the right thing to do and it will make a difference for schools,” he said.

Scarpinato said when the administration talks about “restoring the recession-era cuts” they mean returning schools “to where they need to be on this one piece of the education formula.”

School districts are still grappling with what the governor’s budget proposal will mean to them — if it becomes law. That isn’t a sure thing, as the governor’s budget proposal is predicated on higher revenue projections than the Legislature expects, and lower student population growth than the Legislature estimates.

And while several said they appreciate the increased capital funding, local school officials say even the governor’s five-year plan doesn’t “get them where they need to be.”

Although K-12 funding has increased 13.06 percent since Ducey took office, solely looking at the percentage increase and excluding additional factors like a state’s population size skews the findings.

The Governor Office’s methodology only compares Arizona to nine states, leaving out 40 others. Some might interpret “more money” to mean that the actual dollar amount increased, and states like Florida increased K-12 spending by more than $1 billion and Ohio increased K-12 spending by almost $800 million.

Some states could credibly argue they have made more significant investments, even with additional money from taxes subtracted. Other large states, like California and Texas, spend vastly more on education than Arizona does on a pure dollar basis (though they have raised taxes).

Factors like population size can create a fuller picture about how much money a state spends on K-12 education. States such as Kentucky and Utah have invested in education almost as much as Arizona in dollars and have significantly smaller populations.

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